Gold steadied above a two-month low on Friday ahead of hotly anticipated U.S. payrolls data, but stayed on track for a fourth straight weekly loss as the dollar rose to its highest in more than seven weeks.
The metal is facing its longest run of weekly declines this year after expectations for another hike in U.S. interest rates drove the dollar and U.S. 10-year Treasury yields sharply higher.
Spot gold was at $1,267.46 an ounce at 0930 GMT, little changed from $1,267.65 late on Thursday but off an earlier low of $1,266.25. U.S. December gold futures were down $2.70 an ounce at $1,270.50.
The metal has retreated nearly 1 percent this week.
World stocks rose to a record high on Friday and the dollar hit a seven-week peak, riding on economic optimism ahead of a U.S. job report later in the day. [MKTS/GLOB]
"It`s quite a challenging environment for gold at this point, as the market refocuses on a more positive story," Oxford Economics analyst Daniel Smith said.
"The dollar is stronger than it was a month ago as well, so all those things are creating quite significant headwinds."
With further interest rate rises largely dependent on the health of the U.S. economy, data points such as Friday`s non-farm payrolls reading for September are being closely watched.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
The U.S. employment data is expected to show a slowdown due to hurricanes Harvey and Irma. Payrolls are expected to have increased by 90,000 jobs last month, a Reuters survey of economists showed, after rising by 156,000 in August.
"Investors will be casting a keen eye on (the) non-farm payroll data release, given the relative strength in equities and the dollar," MKS said in a note. "A strong NFP reading could have gold testing the 200-day moving average level at $1,252."
Investor interest in gold has been muted. Holdings of the world`s largest gold-backed exchange-traded fund, SPDR Gold Shares, have fallen 13.6 tonnes so far this week, their first weekly outflow in nine weeks and the largest since late July.
Silver was up 0.1 percent at $16.59 an ounce. Platinum was 0.4 percent higher at $916.30 an ounce, and palladium was up 0.1 percent at $939.60 an ounce.
Palladium maintained its premium over platinum, which it moved into last week for the first time since 2001. The spread between the two reached $28 an ounce on Friday.
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